WASHINGTON, D.C. — The U.S. Department of Housing and Urban Development (HUD) has launched a streamlined process aimed at speeding up Federal Housing Administration (FHA)-insured construction financing for affordable housing developments using Low-Income Housing Tax Credits (LIHTC).
The new LIHTC Express Lane applies to qualifying new-construction loans under FHA’s Section 221(d)(4) program and targets a 30-day decision on firm loan commitments. Both 9 percent and 4 percent LIHTC projects financed with tax-exempt bonds are eligible, with no limits on loan size or number of units. Projects receiving Section 8 project-based rental assistance are excluded.
The program aims to issue firm loan commitments within 30 days, while opening the expedited process to more LIHTC developments and eliminating several reviews and upfront documentation requirements that can slow FHA construction financing.
HUD says the changes are intended to get affordable developments into construction faster by reducing federal processing delays, though the agency did not estimate how many additional units the initiative could produce or how much time it could shave from the overall development process.
The initiative also broadens the pool of developments eligible for expedited processing. Under HUD’s previous LIHTC pilot, projects with 200 or more units could not use the fast-track process; the new Express Lane eliminates that size restriction. It also allows qualifying projects to use the standard maximum loan-to-cost ratio of 80 percent, up from the pilot’s more restrictive 65 percent to 75 percent range, and eliminates a requirement that developers defer at least 25 percent of their developer fee. HUD said the changes affect how qualifying loans are processed, not the agency’s underlying loan-sizing and underwriting standards.
To qualify for the expedited process, projects must be led by experienced LIHTC developers with established track records and strong financial capacity. The initiative took effect Nov. 2.